Banks led by State Bank of India (SBI) will reassess the possibility of extending fresh funds to Vodafone Idea (Vi) following the government’s approval of a relief package that freezes the telecom operator’s adjusted gross revenue (AGR) dues and stretches repayments over 16 years, according to an Economic Times report by Joel Rebello and Himanshi Lohchab dated January 12, 2025.
Also Read: Vodafone Idea Explores Debt Financing After Spectrum Fee Relief
Banks Reopen Funding Talks After AGR Relief
Bankers reportedly said the decision has altered Vi’s liability profile, though clarity on the company’s funding requirements and future business plans will be critical before any fresh lending is considered. Banks have so far been cautious in lending to Vi due to its large statutory liabilities, weak cash flows and concerns over its ability to service new loans.
“Our team will reassess (extending fresh funds) in the light of the new developments,” a senior bank executive familiar with the matter was quoted as saying in the report. “Vi required Rs 35,000 crore, according to the plans shared by the company previously. We need to figure out how much they need now and how much is viable based on the firm’s cash flows. It’s a big amount and will have to come from a consortium of lenders for which banks will have to meet and decide,” an anonymous banker was quoted as saying.
DoT Freezes Nearly 95 Percent of AGR Dues
Last week, the Department of Telecommunications (DoT) froze Vi’s AGR dues of Rs 87,695 crore for the period from 2006-07 to 2018-19 and allowed staggered repayments until 2041. Under the revised schedule, the company will pay Rs 124 crore annually for six years between March 2026 and 2031, followed by Rs 100 crore per year from March 2032 to 2035. The remaining amount will be repaid in equal annual instalments over six years from March 2036 to 2041, after a DoT-appointed committee reassesses the final liability.
Also Read: Vodafone Idea Receives Communication From DoT on AGR Case; Dues Frozen Till Reassessment
This effectively means nearly 95 percent of Vi’s AGR liability will remain frozen for the next decade. “This is a significant development as it deals with a big overhang,” a second bank executive was quoted as saying. “Vi needs funds. But banks will look to also hear from the company on its needs and plans for the future.”
Vi’s Debt Burden Remains Elevated
The relief has eased near-term payment pressure on Vi, which was facing obligations of about Rs 16,400 crore in March 2026. However, the company continues to carry a total debt burden of nearly Rs 2 lakh crore, largely comprising statutory dues, including around Rs 1.2 lakh crore in spectrum liabilities.
While several banks currently have no direct exposure to Vi as earlier loans have been repaid, they remain engaged with the company, a banker reportedly said. Fresh funding is seen as crucial for sustaining network investments, especially since Vi has already utilised more than Rs 20,000 crore raised through an equity issue in April 2024.
Also Read: Tillman Global Holdings in Talks to Invest USD 4–6 Billion in Vodafone Idea
Debt and Equity Funding Options Back on the Table
With greater clarity on AGR dues, both debt and equity funding options are now back on the table, bankers reportedly said. “They need funds, so it could be a mix of both,” a third banking executive was quoted as saying. “They will reach out to banks with their plans…may be after a few weeks, based on which banks will also make their own assessments and form a new consortium.”
Strategic Investor, Equity Raise Among Possibilities
Unnamed market experts were quoted as saying Vi may also explore tapping the equity markets or bringing in a strategic investor. According to earlier reports, the government is scouting for a strategic investor to infuse USD 1 billion for an 11–13 percent stake in the company, with US private equity firm Tillman Global Holdings among those reportedly in talks.
